Posted on: Sunday, April 11, 2004
New plan by HMSA shifts bill to worker
By Deborah Adamson
Advertiser Staff Writer
Higher healthcare costs could be coming for some Hawai'i workers as soon as July 1.
Last month, the state Department of Labor and Industrial Relations, upon the recommendation of the Prepaid Health Care Advisory Council, approved a new Hawaii Medical Service Association health insurance plan that would save businesses money while increasing the overall costs shouldered by workers.
It's the first commercially available health plan since the early 1990s that allows businesses to offer only 80 percent coverage of medical costs without requiring companies to cover employees' dependents. Until now the state required plans without dependent coverage to offer a 90 percent or higher payment.
Businesses that select the new plan, CompMed, will save an average of 7 percent on premiums. HMSA will offer it starting July 1.
If the new plan catches on, Hawai'i would join other states in shifting more of the healthcare burden to workers as businesses grapple with higher medical costs.
"It's just the beginning of a way for companies to share their costs with the employees. This plan is the first step," said John Jacobs, vice president of marketing at HMSA. "Maybe next year, we'll introduce a deductible."
A deductible, common in Mainland insurance plans, requires the insured to pay all medical bills up to a set level each year before the insurance coverage takes over. HMSA is considering changing one of its plans to include a $300 deductible, of which $200 would be paid by the employer. Businesses can use savings from lowered premiums to pay part of the deductible, Jacobs said.
The idea is to get workers used to paying more for care, Jacobs said. Businesses argue that employees have been sheltered from the true cost of healthcare. By letting workers share more of the cost, they would be more careful about spending on medical services. Lower use of services, in turn, could help hold down medical costs that have been increasing in double-digits.
"That's the only way we will have a long-term impact on healthcare costs," Jacobs said.
But such news is disturbing to 22-year-old Kim Mitman, a college student who works part-time at a theater.
She spends a big part of her minimum-wage paycheck on healthcare premiums and drugs for a bipolar disorder. A side job with a union kicks in another $500 a month, which goes toward household expenses. Her mother is a schoolteacher and her father is on disability. She has a younger sister in high school. Scholarships and grants help pay for Mitman's classes in history and Spanish at the University of Hawai'i.
"It gets really rough," she said.
But workers such as Mitman may have no choice but to tighten their belts.
"One of the big trends across the country is to have employees pay more of health insurance costs," said Insurance Commissioner J.P. Schmidt.
In Hawai'i, employers are attempting to shift costs.
The recent concrete strike came about mainly because workers balked at new contracts requiring them to shoulder a higher percentage of medical costs. Ameron Hawaii, the state's largest concrete producer, wanted employees to pay for 30 percent of health insurance premiums instead of their current 20 percent. The strike ended in a compromise, with the employee share staying at 20 percent for two years and rising to 25 percent in the third and 30 percent for the fourth and fifth years. At Hawaiian Cement, workers agreed to pay 20 percent of health insurance premiums when they paid nothing before. In both cases the companies increased wages to help counter the impact of higher health insurance costs.
HMSA's new CompMED plan has a proposed average monthly premium of $224.38 for an individual. It has a doctor's visit fee of $12. Hospitalization, surgeries and other medical services are covered at 80 percent while the employee pays 20 percent. Preventive care services such as mammograms are fully covered and there is no limit for doctor visits for mental issues.
The goal is to better balance the needs of business and employees while staying true to the Prepaid Health Care Act, said Nelson Befitel, Hawai'i's labor director who approved the new HMSA plan.
Enacted in 1974, the Prepaid Health Care Act is the only one of its kind in the country. It requires companies to offer health insurance coverage of employees working at least 20 hours a week and premiums paid by the worker must be capped at 1.5 percent of the gross salary.
Tom Miguel, a planner from Mililani, said workers already are struggling with the high cost of living in Hawai'i. "How are we supposed to make ends meet? Gas prices are high. The price of homes just went up by $29,000 (in a month) and they give us a 1 percent raise," he said. "You see people giving up food for medication. It's sad."
Workers are not the only ones who might feel the squeeze. As shoppers, for instance, people might be paying for it too.
Brian Zinn, owner of the Copy Shop Inc. in Hawai'i Kai, said he has always provided more than just basic healthcare for his five employees. But he's troubled by the more than 10 percent increase a year he sees in premiums. If he doesn't pass the cost to workers, he'll have to raise prices.
"Unless you raise your prices, how are you going to cover that?" he said. "High insurance rates will ultimately be paid by the consumer."
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
